Manufacturing companies hired more workers in April than they laid off, marking the first net growth in employment in the sector since 1989, a widely followed survey released Monday indicated.
The hiring, coupled with rising demand for products, contributed to an expansion in manufacturing activity in April, the eighth consecutive month of growth for manufacturers, said the National Association of Purchasing Management’s monthly survey.
The survey results were stronger than expected and suggested that the overall economy is growing more robust.
Separately, in another sign of economic strength, a government report showed that spending on construction projects, held down the first two months of the year by unusually harsh winter weather, rebounded in March.
The Commerce Department reported Monday that construction spending rose 0.8 percent in March, with a jump in commercial work more than offsetting a drop in government construction. Spending on home building also rose, despite mortgage rates that have gone up since hitting a 25-year low last fall.
“All indicators were headed in the same direction and pointed toward positive economic growth,” said Robert J. Bretz, chairman of the purchasing managers’ survey committee.
The group’s index of manufacturing activity rose to 57.7 points in April from 56.7 in March. Readings above 50 indicate the manufacturing economy is expanding, while readings below 50 indicate it is shrinking.
In April, 17 of the 20 industries in the survey reported improvements, the most since 1990 to report upswings in business.
Economists said the uptick in hiring was not a fluke. The association’s employment index rose to 50.8 points from 48 in March. Readings below 48 in the past have mirrored declines in U.S. Bureau of Labor Statistics data on manufacturing employment.
While some manufacturing companies, such as defense firms, will continue to shed workers, many will add employees to payrolls through the remainder of the year, resulting in a net increase in employment, economists predicted. The survey results suggest that the Labor Department’s monthly employment figures, to be released Friday, also will show growth in hiring.
Up to now, many manufacturing companies had been coping with increased demand by making employees work overtime or by hiring temporary employees, said Raymond Worseck, head of economic research at A.G. Edwards & Sons.
The survey results suggest that companies are “getting to the point where they have to bite the bullet” and hire permanent employees to keep up with demand, said Worseck.
